Planning for Gold
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There's an air of optimism about a business plan competition. Teams bustle along, rehearsing their business plan presentations before delivering them to illustrious judges who not only have business acumen, but are also often connected to large VC firms. Permeating every conversation is a we-can-do-it attitude. Business ideas can range from the highly technical biomedical industry to the more ethereal creative arts arena. Yes, the competition part of it can be nerve-wracking, and the judges are not what one would call an easy audience. Still, it's a great opportunity to win cash and prizes for your business and get pitch time in front of actual VCs--and it's also a huge learning experience from start to finish. It may very well be in the drinking water at a business plan competition, but the general attitude is this: No matter what happens, we'll build a business.
The good news is that these hotbeds of entrepreneurial inspiration are taking place at more venues across the country (and the world, in fact). A large percentage of business plan competitions are associated with university MBA programs, note experts, but a fair number are also produced by communities, open to anyone in the local area or to businesses of a certain type to encourage economic growth. "There are definitely more open competitions," says Mark Cannice, director of the University of San Francisco (USF) Entrepreneurship Program. "As the word spreads about allowing [people] the opportunity to develop a complete business concept and offer it to professional investors and executives, I think that experience has been so powerful and fruitful for so many...I think the demand for most universities to have [competitions] seems to be increasing as well."
To successfully enter the business plan competition fray, know these caveats: Decide if you can enter a university-sponsored one (usually, someone in your management team is required to be an MBA or a graduate student). If your team has no MBAs, you might be able to enter a community or corporate competition with many of the same benefits.
The real test, though, is the future success of business plan competition winners. Do they make it past the startup stage to fulfill their competition-era promise? For Chad Joshi, winner of the WPI Venture Forum Business Plan Contest in Worcester, Massachusetts, in 2000, the potential that judges saw in his business has certainly been fulfilled. The WPI contest, affiliated with the Worcester Polytechnic Institute, is open to any technology-based startup or pre-startup in New England. Joshi, founder of Energen Inc., began laying the groundwork for his company in 1996. The Lowell, Massachusetts-based company manufactures precise motion control products often used in scientific research and optical equipment.
Still in the R&D stage of his business, he first entered the competition in 1998 and came in third. "It was a good learning experience," says Joshi, 46. "I got to meet with the people that reviewed my business plan." Getting valuable feedback, he entered again in 2000 and won that year's first prize: $10,000 ($5,000 in cash and $5,000 in services from various sponsors).
It was just the boon his company needed. "Certainly, it got the attention of the VC community," notes Joshi. "They were much more interested in hearing our story and what we wanted to do." The connections he made through the contest were invaluable, too, as many of his contacts ended up offering good business advice and mentoring his company through its early growth. Today, projecting sales between $1.5 million and $1.7 million, Joshi reflects on what a positive experience a business plan competition provides for aspiring entrepreneurs. "It's a very good way for new people to learn about building a business," he says. "If I had a different business that I was looking to get off the ground, it would be a great way to get exposure."
The exposure and connections within the business community that business plan competitions provide are the primary draws, says Cannice, director of the USF International Business Plan Competition. Started in 2000 as a competition only for USF students, it later expanded to include national and international teams. Requiring at least one member of the team to be a graduate student, the competition offers $25,000 worth of prizes ($10,000 for first place and smaller increments for second, third and so on).
Because of its location in San Francisco, a main draw for the USF contest is the opportunity to present plans to the high-tech VCs who often serve as judges. "Each contest has its own flavor," Cannice says. "The biggest draw is not so much the money, but a once-in-a-lifetime opportunity to pitch their plans to VCs from Silicon Valley...to get the exposure in one weekend that most entrepreneurs will never get in a lifetime."
Though sponsored by a university, the business plan competition is not just an academic exercise by any means. "Most of [our early finalists] are trying to raise money and build a business--the 2004 winner from Wharton [MicroMRI] has just raised half a million dollars in seed capital," says Cannice.
If you're interested in participating in next year's competition, slated for March 9 to 12, 2005, the application deadline is January 25, 2005. Check out the website for more information.
The grand-prize winner of the USF competition also receives an automatic entry into the Moot Corp. Business Plan Competition at the University of Texas, Austin, and a chance to compete for $100,000 in equity investment. Known as "The Super Bowl of World Business Plan Competition," the contest first started in 1984. Formed at the request of two MBA students at the time, the Moot Corp. Competition initially intended to offer MBA candidates the same type of experience that the "moot court" experience offered law school students. Today, the event attracts graduate school teams from all over the world who pitch their business plans to prominent VCs and business leaders.
Businesses ranging from biotechnology and health to art equipment and supply have been successful at the Moot Corp. Competition in the past. The 2003 winning business plan came from the team from Kidsmart Corp., representing the University of Georgia. A smoke detector with a voice recording in it, the product is designed to wake children with the sound of their parents' voices in the event of a fire.
Still, even teams that don't go home with first prize often go on to build successful companies. "It really is an institution that's a win for everybody involved," says Gary M. Cadenhead, director of the Moot Corp. Program. "Even if a team doesn't come home with the first prize, they've improved their skills and gotten feedback from knowledgeable judges." If you're interested in participating in the Moot Corp. Competition, slated for May 4 to 7, 2005, go online for application deadlines and additional information.
Serving a different community is the Piedmont Triad Entrepreneurial Network (PTEN), formerly the Triad Entrepreneurial Initiative. Located in Winston-Salem, North Carolina, it was started in 2001 to encourage entrepreneurship and economic development in the 12-county North Carolina Piedmont Triad region. PTEN sponsors business plan competitions for plans in three rounds of development. The Spark Competition is for the concept stage, offering six prizes of $1,500 each. The Verge Competition is for preliminary business plans, offering three prizes of $10,000 and three of $2,000. Finally, the Fuel Competition is for comprehensive business plans, with a grand prize of $50,000 in cash, 12 months of incubator space, and training and mentoring. (Runner-up teams vie for prizes of $20,000 and smaller increments.)
The contest is open to anyone who lives, works or attends school in the Piedmont Triad region with startup or expansion plans for businesses with high-growth potential, says Sheila Lyons, PTEN executive director. Existing businesses with headquarters in the region are also eligible to participate, as long as they fall under the revenue and employee limitations set by PTEN.
Like the university-sponsored contests, the competition offers participants an invaluable chance to get real-world feedback on their business plans from renowned experts while competing for cash prizes. "You need to get out there and make contacts," says Lyons. "You need to network. You need to talk to other entrepreneurs about what's worked and what hasn't."
The PTEN program also offers educational courses that teams can take to prepare for the competitions. And when it's all said and done, the final presentations make for an exhilarating scene. "It is such a thrill; it's just the most exciting thing to be standing there at the podium and announcing the winners," says Lyons. "The energy, the excitement . . . Even if you're not one of those top six winners, you get so caught up in it. This is a fabulous world."
Each PTEN competition stage has different application deadlines starting in the fall. Log on to www.triadlaunchpad.org for more information.
Eyes on the Prize
- Do investigate competitions on both the local and national levels to see which ones would be a good match for your venture. Check out past winners' business plans to get a feel for not only the structure and content of plans, but also the types of businesses represented.
- Don't overlook the business plan arena just because you're not a graduate student. Even if there isn't a contest in your area that's unaffiliated with a school, experts suggest contacting business schools and contest directors who might be able to point you in the direction of student-led teams looking for experienced businesspeople to add to their management teams.
- Do take advantage of the pre-contest seminars and mentoring options available to enhance your business plan and improve your presentation.
- Don't be discouraged if your business idea doesn't fall into the technology or biotech arenas. Though many business plan competitions garner a large percentage of plans from these industries, successful companies can be built in any industry, from arts and entertainment to transportation or pet care.
- Do go into any competition expecting to be inspired. You're going to be surrounded by some of the brightest minds in the world who are steadily mounting the business revolution of tomorrow. Just soak it in.
A Winner's Walk
Winning the 2001 USF Business Plan Competition was exciting for Tyler Bennett and teammate Felix Schupp. Their business plan for PhysicianPal Inc., a business services provider for physicians and surgery centers, won them that year's first prize of $1,000.
The whole competition and aftermath was a learning experience for the pair. While winning gave Bennett, 34, and Schupp, 29, great exposure, the connections they made helped them navigate the brutal VC environment of 2001. "We ended up getting additional feedback from one of the judges, who [became] our friend afterward," says Bennett. While the VCs liked their plan, they weren't readily dishing out money during that time, a fact reinforced by their new friend and former judge. So the business partners went forward, building the company on their own to get to the stage where they had a proven product with proven customers.
The competition itself, notes Bennett, was a good jumping-off point to get PhysicianPal where it is today. With deals currently in the works, the San Francisco company could gross as much as $1 million in sales this year. Looking back, Bennett says, "It definitely got us motivated. A month later, we incorporated and started working on software development. It validated what we were doing."
Whether it's through a university or a local business initiative, a business plan competition can be just the inspiring forum entrepreneurs need to launch their ideas into the stratosphere. From the seed money to the indispensable business and venture contacts, participants in such events often come away with a renewed vigor for entrepreneurship. "Entrepreneurship, in whatever form, is alive and well," says Cannice. "It's nice to see we have a lot of passionate engineers and scientists and cooks and chefs and artists. It's exciting to see everyone come together. But what it boils down to is: Who's really excited about what they're doing? Who's willing to take the time to build an organization that can do something that's not just neat, but [also] something that can actually make money and do well under competition?"
The SBA has gotten into the business plan revelry, launching its first-ever youth entrepreneur business plan competition. Originally conceived as part of the organization's 50th anniversary celebration, it was created to breed an increased focus on young entrepreneurs. Held during the SBA's May 2004 conference, SBA Expo '04, and organized by the SBA and the National Entrepreneurship Association, the competition accepted business plans from entrepreneurs enrolled in colleges and universities.
Fifty finalists were asked to compete at the Orlando, Florida, event; plans ranged from an urban greeting card company to an international cell phone rental company to the winning plan--a travel and concierge company. The winning team and runners-up were recognized by the SBA at an evening reception and also received prizes from contest cosponsors such as Hewlett-Packard, Microsoft and Office Depot.
The veteran entrepreneurs in attendance were impressed. "They really appreciated the opportunity to meet with young, bright minds that are going into the challenging and compelling world of entrepreneurship," says Jack Bienko, deputy associate administrator for strategic alliances at the SBA. "We expect that there were some friendships and mentoring relationships struck during the conference."
The SBA intends to continue the program and is planning for next year's competition; details hadn't been set at press time. Go to www.sba.gov for more information.